Productivity in the UK fell at its fastest annual rate for five years during the second quarter of 2019, according to the Office for National Statistics (ONS).

Productivity – measured by output per hour – fell by 0.5% after two previous quarters of zero growth. The ONS figures showed a 1.9% hit in manufacturing productivity, on an annual basis, in the second quarter.

The UK economy could enter recession if a second consecutive quarter of negative growth is confirmed. The uncertainty surrounding Brexit has been blamed as a factor behind negative growth.

Commenting on the figures, Richard Heys, Deputy Chief Economist at the ONS, said: 'Labour productivity has continued the weak trajectory it has followed over the last year. Both manufacturing and services saw a fall on this time last year, with only a couple of other relatively small sectors contributing positively. This confirms the broad base of the UK's productivity challenges.'

Meanwhile, Tej Parikh, Chief Economist at the Institute of Directors (IoD), said: 'These figures hammer home the impact uncertainty is having on the business environment.

'Unsure of what's around the corner, businesses' investment in the new equipment and technology that drives up their performance has been stifled.'

Research carried out by insolvency trade body R3 has suggested that a third of UK small businesses are concerned about the impact Brexit will have on their supply chains.

R3's survey of 1,200 business leaders revealed that 11% of firms have reviewed the potential impact of Brexit on their operations, and harbour concerns in regard to their supply chains.

However, 16% of small businesses stated that they have not yet reviewed the potential impact of Brexit on their supply network.

'It's a serious worry that a third of UK businesses feel they are exposed to a supply chain risk as a result of Brexit,' said Duncan Swift, President of R3.

'A key part of preparing for Brexit is looking at how it affects your supply chain and customers. It's all very well making sure your own business has put adaptation plans in place, but these plans might not help if the businesses you depend on – customers and suppliers – are unprepared.

'Businesses which don't understand how Brexit will affect their supply chains are at risk of sleepwalking into trouble.'

Banking customers lost over £600 million to crime during the first half of 2019, according to data from industry group UK Finance.

According to UK Finance's figures, £408 million was stolen by criminals through unauthorised card, remote banking and cheque fraud. In addition, £208 million was lost to authorised push payment (APP) fraud, where customers are tricked into authorising a payment to an account controlled by a criminal.

Commenting on the figures, Katy Worobec, Managing Director of Economic Crime at UK Finance, said: 'Not only does fraud have a devastating impact on victims, the money stolen goes on to line the pockets of organised criminal gangs involved in drugs, arms and human trafficking.

'The finance industry is constantly investing in advanced security systems to protect customers from this threat, while helping law enforcement to apprehend and disrupt the criminals responsible.

'A new voluntary code was introduced in May that has significantly improved consumer protections from authorised push payment fraud, with signatory firms committed to reimbursing victims providing they have met certain standards.'

The finance industry prevented £820 million of unauthorised fraud in the first half of 2019, up 14% on the previous year. This is equivalent to £2 in every £3 of attempted unauthorised fraud being stopped, or £4.5 million of fraud being prevented every day.

The UK economy is 'on the cusp of recession' after the services sector suffered an unexpectedly sharp downturn last month, according to research from IHS Markit.

IHS Markit's Purchasing Managers' Index (PMI) for September fell to 48.8 from 49.7 in August. This represents its lowest level since July 2016.

A PMI reading below 50 indicates that the economy is generally contracting.

IHS Markit said the figures suggest that Britain's economy shrank by 0.1% in the three months to September.

Commenting on the survey, Chris Williamson, Economist at IHS Markit, said: 'Coming on the heels of a decline in the second quarter, (this) would mean the UK is facing a heightened risk of recession.'

If confirmed by official figures published next month, it would mean the UK has suffered two consecutive quarters of contraction – the definition of a recession.

The services sector – which covers a range of businesses, from law firms and accountants to travel agents and restaurants – represents 80% of UK economic output.

Chancellor Sajid Javid has suggested that the government 'may be prepared' to scrap inheritance tax (IHT).

IHT is levied on a person's estate when they die, and certain gifts made during an individual's lifetime. The rate of tax on death is 40% and 20% on lifetime transfers, where chargeable. For 2019/20, the first £325,000 chargeable to IHT is at 0%, and this is known as the nil-rate band.

A reduced rate of IHT applies where 10% or more of a deceased individual's net estate (after deducting IHT exemptions, reliefs and the nil-rate band) is left to charity. In those cases, the 40% rate is reduced to 36%.

Speaking at the Conservative Party Conference, the Chancellor revealed that scrapping IHT is 'on his mind'.

He said: 'I understand the arguments against that tax. You pay taxes already through work or through investments, and your capital gains in other taxes. There is a real issue with then asking them to, on that income, pay taxes all over again.

'Sensible changes have already been made but it's something that's on my mind.'

However, experts have warned that abolishing IHT could be 'hugely expensive': the tax raised £5.3 billion for the Treasury in 2018.

Chancellor Sajid Javid has pledged to raise the National Living Wage (NLW) to £10.50 within the next five years.

Speaking at the Conservative Party Conference, the Chancellor also said he would lower the qualifying age for the NLW from 25 to 21.

The current rate for over 25s is £8.21. The Living Wage Foundation says the NLW should already be £9 across the UK and £10.55 for workers in London.

The announcement came as Mr Javid confirmed a number of spending plans, including £25 billion for road projects and £220 million for bus improvements. In addition, he said there will be £5 billion for digital infrastructure, along with £500 million extra funding for youth services.

Speaking at the conference, Mr Javid said: 'In 2016, we introduced the NLW, giving Britain's workers the biggest pay rise in two decades. In April, we increased the rate again, making 1.8 million workers better off, putting the number of low paid workers at its lowest level in four decades.

'Over the next five years, we will make the UK one of the first major economies in the world to end low pay altogether.To do that, I am setting a new target for the NLW: raising it to match two-thirds of median earnings.'

The minimum wage is paid at an hourly rate, with payment bands depending on age, and special provisions applying to apprentices. The NLW is the minimum wage for those aged 25 and over, whilst the National Minimum Wage (NMW) applies to those above school leaving age and individuals aged under 25.

The Association of Taxation Technicians (ATT) has called for 'urgent clarity' on next April's changes to the off-payroll working rules.

From April 2020, HMRC intends to extend off-payroll working rules, known as IR35, to private sector contractors who work for medium and large businesses.

IR35 applies to individuals who provide their personal services via an 'intermediary'. An intermediary may be another individual, a partnership, an unincorporated association or a company; however, the most common structure is a worker providing their services via their own company – known as 'personal service companies' (PSCs). 

The rules are specifically designed to prevent the avoidance of tax and national insurance contributions (NICs) by those using PSCs and partnerships, and were introduced to the public sector in 2017.

In a submission to HMRC, the ATT outlined its concerns in regard to the 'lack of detail' on the changes in the Finance Bill 2019-20 draft legislation.

'Uncertainty in how the off-payroll rules will operate in practice is making it difficult for businesses to make adequate preparations,' said Michael Steed, Co-chair of the Technical Steering Group at the ATT.

'These changes come in from next April, which means that businesses now have only about six months to get ready – and this at a time when many may also be preparing for or responding to the implications of Brexit.'

The ATT has urged HMRC to release more information and detailed guidance 'as soon as possible'.

The Bank of England (BoE) may cut interest rates in the near future if the uncertainty around Brexit continues, according to economist Michael Saunders, who is a member of the Monetary Policy Committee (MPC).

In a speech, Mr Saunders said that confusion over Britain's exit from the EU has 'hurt business confidence'. The BoE is also concerned about headwinds from a potential global economic slowdown, he added.

Mr Saunders, who has previously pushed for rate hikes, now says a cut 'may be necessary'.

In his speech, he said: 'If the UK avoids a no-deal Brexit, monetary policy also could go either way and I think it is quite plausible that the next move in Bank Rate would be down rather than up.

'One scenario is that Brexit uncertainty falls significantly and global growth recovers a bit. In this case, some further monetary tightening (limited and gradual) is likely to be needed over time.'

He said that the high level of Brexit uncertainty is broadly based across industry sectors. The three sectors reporting the highest levels of uncertainty are wholesale and retail, which is most reliant on EU imports; accommodation and food, which is the largest user of EU migrant labour; and manufacturing, which is the biggest exporter to the EU.

Nearly half of pension pots were accessed without advice or guidance being sought last year, according to the latest retirement income data from the Financial Conduct Authority (FCA).

The FCA's 2018/19 report showed that 37% of plans were accessed by plan holders who took regulated advice, and 15% by plan holders who did not take advice but received Pension Wise guidance. The remaining 48% of plan holders did not seek regulated advice or guidance.

Between 1 April 2018 and 31 March 2019, 645,000 pension pots were accessed to buy an annuity, move into drawdown or take a first cash withdrawal. Of those, 350,000 pension pots were fully withdrawn the first time they were accessed, 90% of which were less than £30,000 in value.

The FCA's analysis showed that taking advice generally depended on the size of the pension pot. While 70% of consumers with pot sizes of £100,000 and over sought regulated advice, only 20% of those with less than £10,000 in pension savings did. The FCA said it is concerned with the reduction in the number of people accessing advice, with 34% taking no advice whatsoever, up from 31% the previous year. 

Commenting on the matter, Keith Richards, CEO of professional body the Personal Finance Society (PFS), said: 'It is deeply concerning how many people are pulling all their cash from their pension pots without advice or guidance, and the potentially catastrophic poor outcome for thousands of consumers must be acknowledged as a failing of government and regulator to deliver clear guidance for the public.

'The PFS would like to see the government and the FCA do more to make sure providers are signposting guidance services and advice, and explaining the potential ramifications if you don't seek assistance.'